8. Terms of payment for medical expense plans

But I Paid My Premiums!

Besides possibly paying the premiums for a medical insurance plan, the insured is almost always responsible for making other, out-of-pocket payments. This practice helps keep overall costs down for both insureds and the insurance companies and ensures that insureds are informed about the costs of health care.

For each of the following scenarios, select which type of other cost or provision is illustrated.

Larry had routine surgery performed at His local hospital. All charges were within the reasonable and customary costs in His area.

____participation (co-insurance)

____Internal limits

____Coordination of benefits

____Deductible

Nick has had an illness and an accident during the year. His combined out-of-pocket expense for both incidents was $1,000. The insurance company will now start to pay some of his medical expenses. What does the $1,000 represent?

____Coordination of benefits

____Deductible

____Participation (co-insurance)

_____Internal limits

Rosa had a horrible accident that required a year of treatments and rehabilitation. Fortunately, Rosas policy has a stop-loss provision that limits how much out-of-pocket expense she has to pay.

____Participation (co-insurance)

____Internal limits

____Deductible

____Coordination of benefits

Tim has standard, personal medical insurance. After a recent accident, he visited the emergency room. One of the questions on the admission form asked if the accident occurred at work.

____Participation (co-insurance)

____Deductible

____Coordination of benefits

____Internal limits

Alyssa, a graphic artist, is 24 years old and has owned a major medical insurance policy for three years. The policy, which she purchased through her alumni association, provides the following coverage:

	a $1,000,000 lifetime limit
	a $2,500 deductible and 80% coinsurance clause
	internal limits of $250 per day for a semi-private room and board, $4,500 per occurrence for x-rays, prescription drugs, and other medical expenses, and a $45,000 maximum limit per occurrence on surgical procedures
	a $25,000 limit per occurrence on rehabilitation and physical therapy
	if a hospital charges a room rate that is greater than the policys stated internal limit, the hospital agrees to reduce the room rate to the policys internal limit.

Last month, Alyssa was injured in an automobile accident. She spent 4 days in the hospital in a room that cost $350 per day, incurred $3,850 for other medical expenses, and $32,000 in surgical expenses.

Given these claim costs, complete the following table and answer the related questions

	Policy Limit	Total Claim
Hospital charges	$250 per day
Surgery costs
Other medical costs
Rehabilitation and therapy costs
Deductible
Co-insurance percentage	%
Total cost of claim

Based on this data, the total cost to the insurance company is___________________

, while the out-of-pocket cost to Alyssa is______________________________

How much did Alyssa save by having her medical insurance policy?_________________________

Assume that the hospital changed its payment policy to make the patient responsible for the difference between the hospitals room rate and the insurance companys responsibility ($350 per day versus $250 per day). By how much would Alyssas out-of-pocket cost for her hospital room change due in hospital billing ?

___Alyssas costs would increase by $280.

____Alyssas costs would increase by $120.

____Alyssas costs would increase by $400.